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Most hotel parent companies, such as IHG, Hyatt, and Hilton, haven't created brands in alternative accommodations. But a report coming this week from real estate services company JLL will spotlight some billion-dollar reasons why that will change.

Series: Early Check-In

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JLL Hotels & Hospitality appears to have brokered more transactions than any other hotel sector advisor over the last five years. The real estate services company has the ear of private equity firms, hotel groups, and other investors. So it’s notable that JLL’s research team will release its first report on the opportunities in alternative accommodations. I saw a preview.

UPDATE: June 22: Here’s the link to the JLL report, now published.

JLL’s report poses a handful of key questions.

  • “How will the current lodging distribution model evolve, and will the lines between hotels and other accommodations continue to blur?”
  • “Will the major hotel parent companies (Accor, Hilton, Hyatt, IHG, Marriott) increase their exposure across the sector? If so, will it be done via the creation of new brands, M&A, or a hybrid model?”
  • “Will traditional hotel owners (namely private equity) increase investment into the space?”

Let’s tackle distribution first, the somewhat surprising X factor.

  • “Some private equity groups have already begun exploring an entry into the sector,” JLL writes. “However, many have expressed a desire to wait until the traditional hotel companies enter the space rather than invest in the existing players.”
  • So far, many traditional hotel parent companies have either balked at, or exited, the alternative accommodations sector.
  • Accor’s acquisition of Onefinestay and Marriott’s loyalty-program reward play, Homes & Villas, are the most notable big pushes today. Wyndham and Choice have entered and exited the vacation rental space. Short-term rentals have rarely been touched by the big groups.
  • JLL blames the reluctance of hotel parent companies to bet on the emerging sector on the relative immaturity of online distribution — a key source of demand.
  • Today, companies such as Airbnb,, and Vrbo dominate online sales. But to date, they typically struggle to present short-term rentals, vacation rentals, serviced apartments, and other alternative accommodations alongside hotels in easily comparable ways, such as total price after fees.
  • Google, Kayak, and Trivago haven’t done a good enough job at displaying hotels and alternative accommodations in parity with each other.
  • Currently, Marriott doesn’t show its Homes and Villas product side-by-side with hotels in its Bonvoy mobile app, though it does advertise the vacation home offering in ads on its desktop site that click away to a separate booking experience.
  • Distribution remains more fragmented for rentals than for hotels. JLL sees that as a major stumbling block.

Over time, JLL expects managers of alternative accommodations to become more sophisticated at online distribution. As online booking becomes simpler for travelers, volumes will expand. The yield on alternative accommodations will also improve — luring more hotel sector players to invest in the emerging sector.

  • Consolidation will create a wave of emerging brands that will be sophisticated about driving direct bookings.
  • Reducing fees to the distribution middlemen will help improve the performance of alternative accommodations.
  • These factors will, in turn, will attract more institutional investors — which will encourage hotel parent companies to enter the alternative accommodations sector.
  • The injection of institutional capital has the potential to accelerate the sector’s growth just as it did to the hotel industry in the 1980s,” JLL says. (Emphasis added.)

Expect hotel parent companies to extend their brands into alternative accommodations. Here are a few paths they can choose, according to JLL:

  • “Develop and manage a new brand.”
  • “Acquire and manage a new brand.”
  • “White-label an existing brand without assuming management.”

JLL expects more private equity investment in alternative accommodations.

  • Investors have begun to see a hotel-style financial profile for many professionally managed alternative accommodations, making them a more appealing potential investment.
  • JLL Research estimates that at year-end 2021, short-term rentals in the U.S. had a yield between 6.4 percent and 8.3 percent, which compares favorably with the 8.3 percent average yield at U.S. hotels last year.

The opportunity is large. Last year, alternative accommodations generated about $60 billion in revenue out of the world’s total travel lodging revenue of approximately $300 billion, according to some estimates. Expect the new JLL Research to be released on JLL’s site this week and to be widely read and debated.

I always read tips and feedback. Contact me at [email protected] or via LinkedIn. Thank you to the reader who reminded me of Wyndham and Choice’s entering and exiting the vacation rental segment.


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Tags: Early Check-In, future of lodging, hotels, jll, Skift Pro Columns